Right, going into shared equity from full ownership - am I mad?

space_hopper

Well I'm going to defend shared ownership.

I will list the bad points

1. Properties are overvalued
2. Any improvements you make may make zero difference to valuation
3. If you buy a shared ownership, Flat, beware of service charges which will go up, regardless of the inflation rate

Here are the good points

1. Buyers waiting to buy your house (contrary to the above posts)
2. You minimize your loss IF your property reduces value
3. Cheap, see below

I currently live in a 3 bed semi, full valuation 140k, probably 10k more than the area norm

My mortgage is 340 per month and 160 per month, if I were to rent a property of similar spec we are talking £600 a month

It's all about interest rates guys. Few years ago I sorted a tracker for 70k mortgage, 0.49% above BOE rate. All I'm saying is, judge the area, judge your deal

Shared Ownership schemes have good and bad points, the plus points far outweigh any negatives.

Remember, each month you are banking into equity rather than some-one else's pension pot. It's this equity that's that deciding factor.

Beware to pick a housing association that doesn't have a clause
"we retain the right to alter/change the rent whenever we like"

Pick one that specifically links rent to social letting inflation as detailed by the government.

As I said beware of service charges on shared ownership flats, this is where people get caught out, and this is the profit is ensured by housing associations, thousands of flats still empty because of this insult to intelligence

Hope that helps, I'm very happy with it. I will have zero issues moving and selling

brit1234

space_hopper wrote: »

I will have zero issues moving and selling

Are you sure?

These are the ever increasing list of SO properties where I use to not selling, most on the market for ages.

http://www.rightmove.co.uk/property-for-sale/find.html?searchType=SALE&locationIdentifier=OUTCODE^2731&insId=1&radius=0.0&displayPropertyType=&minBedrooms=&maxBedrooms=&minPrice=&maxPrice=&retirement=&partBuyPartRent=true&maxDaysSinceAdded=&_includeSSTC=on&x=70&y=18&sortByPriceDescending=false&primaryDisplayPropertyType=&secondaryDisplayPropertyType=&oldDisplayPropertyType=&oldPrimaryDisplayPropertyType=&newHome=&auction=false

I'm a keyworker with many friends with these properties, ever one now regrets it.

space_hopper

Couldn't get onto that Link Brit, is it a shared ownership list of properties not selling? what location? are they flats?

What is the rental £ in the area.

Simple case of, if it costs more renting than shared ownership then why pay someones pension?

I dare say that as a keyworker I'm guessing these are new shared ownership deals in flats? 2 beds?

Homes sell, flats are void

brit1234

space_hopper wrote: »

Couldn't get onto that Link Brit, is it a shared ownership list of properties not selling? what location? are they flats?

What is the rental £ in the area.

Simple case of, if it costs more renting than shared ownership then why pay someones pension?

I dare say that as a keyworker I'm guessing these are new shared ownership deals in flats? 2 beds?

Homes sell, flats are void

Brentford West London. About 15 1-2 bedroom flats about 6 years old. All the key worker rented stuff is about half the price of the shared ownership costs, with no council tax and all bills paid on top.

Eels100

Food for thought folks.

I think we're going to try and sit tight, see if I can squeeze in more hours at work and hope my lender will accommodate a longer IO period than we've got currently agreed.

Thanks so much for all your points, very interesting (even if the scheme I'm looking at is a no-rent scheme, it's alarming that the service charges can be so high!).

Newtie_Newt

Hi I am new to this forum and just wanted to put forward a more positive view of SE. All in all it appears that SE is a safer scheme than SO. It's a shame that SE schemes like the My Choice Home Buy scheme that was available in London and the South East isn't available any more. I just want to echo girlatplay's post and state that not all scheme are bad...

Two years ago I found a 2 bed flat on the open market in a nice enough area in South London, zone 3 (not a new build - it's a first & top floor Victorian Conversion in a semi-detached house on a regular street) and bought a 55% share. The housing association involved paid 45% and thus have a 'legal charge' over my property. I do have to pay the HA about £130 per month ('interest' -which rises in line with RPI each year). But this £130 is manageable. If I bought the flat myself I would be paying an extra £700 per month on my mortgage - just not doable on my salary. If I sell I must pay the HA their 45% of the sale price ( I can sell whenever I want and put the property on the market through an Estate Agent (s) of my choice at a price of my choice). I am the sole owner and yes I have to cover all maintenance costs etc. As it is not a new build service charges are not too bad though I am at the mercy of an unscrupulous freeholder but that's another story and certainly not and problem exclusive to SE just part of the perils of being a leaseholder-but that's another story.
Being a secondary school teacher in a local school I would never have been able to afford to buy anywhere without this help. Renting, too, would have been a struggle. I am now able to live somewhere I like in a nice area and I can within my means.
If house prices remain relatively low I may be able to afford to increase my share (though I may just overpay mortgage insteadfor a while).

Where I live, on a teacher's salary, even many studio flats are out of my reach. In some areas SE/SO is really the only option for people on lower salaries. I don't believe house prices in some areas of London will ever be affordable to key workers and people on lower or even average wages.

space_hopper

And if you do go for Shared Ownership, make sure that the rent is inclusive of repairs and buildings insurance, most are

chiki1

Eels100 wrote: »

Food for thought folks.

I think we're going to try and sit tight, see if I can squeeze in more hours at work and hope my lender will accommodate a longer IO period than we've got currently agreed.

Thanks so much for all your points, very interesting (even if the scheme I'm looking at is a no-rent scheme, it's alarming that the service charges can be so high!).

i'm looking into the same scheme, eels. i think the advice here is very skewed and not many people actually know what you're talking about. i've looked into (and i'm no dummy) and it's a good one. just a few points to consider:

1. the share the gov puts in is more like an interest free loan; i intend to continue saving as much as i can (mortgage is definitely cheaper than rent--with rent you are paying the bank interest AND the landlord a profit)

2. make sure it's in the right area--many of these schemes are in areas of 'regeneration'......some will improve, but there are loads of areas in scotland i wouldn't touch with a barge pole

i'm curious if anyone else in scotland is going for this and if so, how it's going? i've not found a development i would like to buy into yet, but has anyone else started?

chiki1

forgot to say, eels, that's it's a first time buyer scheme so i don't think you'd be eligible if you've already got a mortgage.

brit1234

Turnbull2000 wrote: »

The government is highly keen on promoting shared-ownership. For those without wealthy parents, this may be the only realistic route to avoiding renting. Expect it to become way more typical in the coming years.

Grant Schaps the Housing minister said the re is no more money from government for shared equity or ownership properties. He mentioned affordable rent would be their new strategy.

Newtie_Newt wrote: »

Hi I am new to this forum and just wanted to put forward a more positive view of SE. All in all it appears that SE is a safer scheme than SO. It's a shame that SE schemes like the My Choice Home Buy scheme that was available in London and the South East isn't available any more.

Shared equity is just a time bomb waiting to go off, it is much incline with the American sub prime deals. You get 15-25% off which you have to pay back after 5-10 years. The issue is these properties are more than 15-25% over valued. When the 5-10 year mark arrives you are under greater fiancial strain like the subprime 3 year mark which started the economic breakdown.

I am so glad the government has stopped funding them because it stops trapping people and allows property to fall to affordable levels.